Editor’s note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our s each morning at 5:15 a.m. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro . An unprecedented price cap on Russian oil hatched by the U.S., EU and other G-7 nations is nearly a week old. Here’s how it’s going. A refresher: The deal bans Western companies from shipping or insuring Russian oil unless it’s sold for less than $60 per barrel. The idea is to hammer Russia’s ability to finance its invasion of Ukraine, while avoiding an economic shock from taking its oil off the market. How it’s going so far: Russia’s oil exports appear to have dipped in the wake of the announcement and oil tankers are snarled near Turkey . But any loss of supply hasn’t driven an immediate global price spike. Why Treasury is hopeful: Biden administration officials see early evidence that the plan is hitting its two main metrics — maintaining oil market stability while limiting a key source of funding for Russia’s budget. The latter is harder to gauge, but a Treasury official said the department is optimistic about signs that Russian revenue is being impacted. Russian central bank analysts said in a report Wednesday that the price cap and an EU ban on seaborne Russian oil could "significantly reduce" Russia's economic activity in the coming months. A Wall Street Journal story this week outlined how the $60 per barrel cap is above Russia’s $40 per barrel cost of production but below a $70 per barrel price the country needs to balance its budget. The Treasury official said the department is comfortable with major importers purchasing discounted oil outside the cap if it advances objectives of keeping markets well supplied and cutting into Russian revenue Reality check: Oil analysts say it’s too early to declare victory for a plan that has no precedent in history. Raymond James managing director Pavel Molchanov predicts the impact on Russia’s budget “will be mild.” Washington and Brussels don’t have direct jurisdiction over what businesses do in China, India or Turkey, and so changing their behavior may require secondary sanctions or diplomacy. “Its effectiveness is in question,” he said. “It is very much a question mark.” Energy Aspects head of geopolitics Richard Bronze said the firm has heard confusion among its clients about how different sanctions elements interact or don’t. “The policies and the intentions are in the right direction but it does feel like what has been created is an incredibly uncertain landscape that’s persisted for all of this year,” he said. “In that environment, investment in energy supply becomes harder.” The view from the Hill : Lawmakers also have concerns. Sens. Chris Van Hollen (D-Md.) and Pat Toomey (R-Pa.) are proposing legislation that would impose secondary sanctions on foreign entities involved in the purchase of Russian seaborne petroleum above the price cap, which would be lowered over a period of three years. “It’s too early to say” if the cap has been effective, Van Hollen said in an interview. “I do think ultimately we may need a sanctions backup to enforce it.” Finally, it’s Friday — MM readers sent a few recommendations for your weekend listening: Fontaines D.C., Desert Sessions, Spirits of Leo, Plight and Vega Maestro. Mark Calabria made the fair point that Def Leppard’s Pyromania album is probably better than Hysteria, but I think we all agree that, either way, Photograph is hands down the band’s best song. It was great hearing from you this week. Please keep in touch. I’m zwarmbrodt@politico.com and Sam Sutton is ssutton@politico.com .
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